Store card rates rise for Christmas

Wednesday, 24 September 2008 11:27

As stores start to stock Christmas ranges, shoppers are warned store card rates are also rising.

With annual interest rates of over 25 per cent, consumers have long been warned about the danger of store cards - with much cheaper personal loan and credit card deals available - but as the rising cost of living and the credit crunch bite, it is predicted the take up of cards will rise this winter.

With three months to Christmas, store cards from Karen Millen, Oasis and Principles have increased rates by up to 4.3 per cent, now charging 28.9 per cent APR on purchases.

Firms have also been cutting minimum repayments required - so the total size and length of the debt grows.

With £500 borrowed on a store card charging 28.9 per cent with only a 3.65 per cent minimum repayment made, it will take 11 years and nine months to repay the debt.

Total interest payable on the £500 would be £565.33.

"Last year store card providers which charged more than 25 per cent APR were told to warn customers that cheaper deals could be found elsewhere, leading to rates being cut," said Michele Slade at Moneyfacts.co.uk.

"Now, just like on credit cards rates have been increased."

The advice for anyone tempted by a store card is to make sure they pay off the balance each month to avoid falling into an olid debt.

"Anyone taking advantage of the offered discounts needs to make sure they pay their balance off in full, otherwise the latest Christmas must-have could end up costing you twice the price," Ms Slade concluded.

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